Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

The Home Depot, Inc. (HD), Bank of America Corp (BAC): Nervous Investors Hold Markets Down

This afternoon at 2 p.m. EDT, the Federal Reserve’s most recent meeting minutes are scheduled to be released. Over the past few months, as the Fed has begun to signal a possible slowing of its bond-buying program, investors have become nervous and sold off stocks and bonds. In the aftermath, the Dow Jones Industrial Average and S&P 500 had both fallen nearly 5% from their all-time highs, and Treasury Bond yields had jumped dramatically higher as investors began to anticipate rising rates.

The Home Depot, Inc. (NYSE:HD)

The rising T-Bill yields have caused mortgage interest rates to rise as well. A housing-related report released today showed that mortgage activity declined by 3% last week, which some are blaming on higher interest rates. While that may be the case, remember that last week was a short holiday week for most Americans, which may also explain the decline. Regardless, it will be interesting to see how the markets react to the minutes today and where interest rate go from here.

As of 12:55 p.m. EDT the Dow is just slightly lower, down 22 points, or 0.15%, while the S&P 500 is down 0.11% and the Nasdaq is up 0.2%. There’s much more red than green on the Dow’s big board right now, so let’s take a look at a few of the losers.

Shares of The Home Depot, Inc. (NYSE:HD) are down 0.4%, likely due to the decline in mortgage activity last week. The home improvement store performs better when housing prices are moving higher and there is a good flow within the housing industry. As more homes are sold, whether they are new or pre-owned, The Home Depot, Inc. (NYSE:HD) will likely see increased foot traffic in its stores as the new owners change and customize their homes.

Bank of America Corp (NYSE:BAC)‘s 1.3% loss likely owes to the slowing mortgage business as well. Since the financial crisis ended and the big banks came under tougher regulations and restrictions, we have seen Bank of America Corp (NYSE:BAC) and JPMorgan Chase & Co. (NYSE:JPM) move more into the mortgage business and reduce their exposure to other parts of banking and investing. Both the Dow’s banking stocks now rely heavily on the revenue they derive from the mortgages, so if the business begins to falter, we will likely see revenue and profits from the large banks slow and even decline. Shares of JPMorgan Chase & Co. (NYSE:JPM) are down 0.5% at the time of writing.

Lastly, shares of American Express Company (NYSE:AXP) are down 2%, leading all Dow losers downward despite a lack of news. Butthe stock did just hit a fresh 52-week high of $78.61 yesterday, and we may be seeing investors pulling out of the stock, believing it has peaked. Over the next few weeks or months, it may hover near where it is today.

The article Nervous Investors Hold Markets Down originally appeared on and is written by Matt Thalman.

Fool contributor Matt Thalman owns shares of Bank of America and JPMorgan Chase & Co (NYSE:JPM).. Check back Monday through Friday as Matt explains what caused the Dow’s winners and losers of the day, and every Saturday for a weekly recap. Follow Matt on Twitter @mthalman5513. The Motley Fool recommends American Express, Bank of America, and Home Depot. The Motley Fool owns shares of Bank of America and JPMorgan Chase.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.